Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the spinning politician company is considering thr

The Spinning Politician Company is considering three mutually exclusive projects: Adscams, Boondoggles and Closures. Project...

90.2K

Verified Solution

Question

Accounting

image

The Spinning Politician Company is considering three mutually exclusive projects: Adscams, Boondoggles and Closures. Project Adscams requires an initial investment of $12.000 and is expected to generate after-tax cash flows of $6,000 per year for five years. Project Boondoggles requires an initial investment of S18,000 and is expected to generate after-tax cash flows of $10,000 per year for three years. Project Closures requires an initial investment of $25,000 and is expected to generate $11,000 per year for four years. All projects can be replicated, and the initial cash outlay is net of any potential tax benefits for each. The project betas for Adscams, Boondoggles and Closures are 1.2, 0.9 and 1.5, respectively. The risk-free rate is 4.25 percent and the expected return on the market is 10.5 percent Required: a) b) c) Find the required rates of return for the three projects. Find the NPV of each of the three projects. Which project should the company undertake and why

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $60,000 or...

Finance
1.2K views

Consider the following income statement for the Heir Jordan Corporation:    HEIR JORDAN CORPORATION Income Statement   Sales $ 47,000   Cost 31,300   Taxable income $ 15,700   Taxes (35%) 5,495   Net income $ 10,205       Dividends $ 2,500       Addition...

Electrical Engineering
1.2K views

How to generate spectral plots in MatLab of transfer function hw = (0.15*s^3+937500*s)/(0.15*s^3+375*s^2+1062500*s+2500000000) over the range from 100 Hz...

Biology
1.2K views

In a population the frequency of a recessive disease is 1 10000 Determine the frequency...

Biology
1.2K views

Oogenesis the process that creates female gametes is halted at prophase I until puberty Which...

Basic Math
1.2K views

The body mass index, I, can be used to determine an individual's risk for heart...

Algebra
1.2K views

Given the graphs of f x and g x below find the composition of functions...

Algebra
1.2K views

A bakery sold 76 mocha cupcakes in a day which was 95 of the total...

Accounting
1.2K views

AC E-Alpha My Courses Which of the following is...

Accounting
1.2K views

Please help! \begin{tabular}{|c|c|} \hline Harih & 4164,108 \\ \hline Aent &...

Accounting
1.2K views

Waterways mass-produces a special connector unit that it normally sells for $3.60. It sells approximately...

Accounting
1.2K views

5. In the role of cost manager why you need to measure, monitor, and motivate...